3 Major Life Changes That May Impact Your Taxes

As you go through different phases of life, your tax situation can change significantly. It's important to be aware of these changes so you can plan ahead and avoid any surprises come tax season. Here are three major life changes that may impact your taxes: 

1. Getting Married or Divorced 

Getting married or divorced can have significant tax implications. If you get married, your tax situation will change in a number of ways. First, you'll need to decide whether to file your taxes jointly or separately. Filing jointly can often result in a lower tax bill, but it's important to run the numbers both ways to make sure you're getting the best deal. Additionally, you may be eligible for certain tax credits and deductions that weren't available to you as a single person. If you get divorced, you'll also need to think about how your taxes will be impacted. For example, you may need to change your filing status from married to single or head of household. Additionally, you'll need to determine who gets to claim any children as dependents, and whether alimony payments are tax deductible. 

2. Having Children 

When you have children, there are several tax breaks you may be able to claim. If eligible, the Child Tax Credit can reduce your tax bill by up to $2,000 per child per year. Not to mention the Earned Income Tax Credit, which is a refundable credit for low- to moderate-income families. You may be able to deduct expenses related to childcare or adoption. 

3. Buying or Selling a Home

Buying or selling a home can also impact your tax situation. If you sell your primary residence, you may be able to exclude up to $250,000 of the gain from your taxable income. If you've owned the home for at least two years and have lived in it as your primary residence for at least two of the past five years, you may be eligible for this exclusion. On the other hand, if you sell an investment property, you may be subject to capital gains tax. Additionally, if you buy a home, you may be eligible for certain tax credits and deductions related to the mortgage interest and property taxes you pay. It's important to keep track of these major life changes and how they impact your taxes. By planning ahead and taking advantage of available tax breaks, you can minimize your tax bill and keep more money in your pocket. We’re always here to discuss how to best prepare yourself based on your individual situation.


This content is for informational purposes only, as always consult with a qualified tax or legal professional regarding your specific circumstances.